What are the rights of mortgagee?

The transferee or person in whose favour the interest is being transferred is known as mortgagee. Now that you know what is mortgagee, let me talk to you about

rights and liabilities of mortgagee as per the law. Please read carefully.

Rights of mortgagee under Transfer of Property Act

• Right to foreclosure : 

• Section 67 of the Transfer of Property Act, 1882 endowed the Mortgagee with the right of foreclosure which emancipates the Mortgagee to take the collateral on loan when the loan payments have defaulted. 

• It is one of the two pivotal rights that terminate a mortgage are the right to foreclosure and the right to redemption. 

• Both the rights are co-extensive despite the fact that the former is provided for the Mortgagee, whereas, the latter is for Mortgagor. 

• Right to sue :

  According to the Section 68 of the Transfer of Property Act, the following are circumstances, under which a Mortgagee can sue for mortgage money,

• Default in repayment

  – If the Mortgagor fails to repay the mortgage money.

• Destruction of the mortgaged property

  – If the immovable property has wholly or partially been destroyed.

• Insufficient security

  – If the Mortgagor fails to provide sufficient security even after a reasonable opportunity to do so.

• Deprivation of security

  – If the Mortgagee has dispossessed off his security due to the wrongful act of the Mortgagor.

• Non-delivery of the possession

  – If the Mortgagor has failed to deliver the mortgage property to the mortgagee.

• Securance of the possession

  – The Mortgagee is entitled to possess the mortgaged property without the disturbance from the side of the Mortgagor or any other person claiming that he has a superior title over the mortgaged property.

•  Right to sell:

  Section 69 of the Act provides the right to the Mortgagee to sell the mortgaged property without the court intervention. As per this Section, the Mortgagee or his representative is authorised to sell the mortgaged property after the repayment becomes due, but this right is limited to the following three cases,

• Where the mortgage is an English mortgage i.e. parties to the mortgage do not belong to the community of Hindu, Muslim, or any other race or any other notified by the state government.

• Where the Mortgagee is government, and such Mortgagee’s power of sale without the intervention of the court has conferred by an express provision of the mortgage deed.

• Where the mortgaged property is situated at Madras, Calcutta, Bombay, or any other towns specified in the official government gazette.

• Right to appoint a receiver:

  Section 69A of the Transfer of Property Act deals with the appointment of a receiver by the Mortgagee. Clause (3) of the Section defines the receiver as the agent of the mortgagor. He will be made liable for all the acts and defaults of the receiver, unless and until it is the resultant of the Mortgagee’s intervention. 

• Right to accession:

  Section 70 of the Act provides that the mortgagee is entitled to avail the accession made to the mortgaged property after the mortgage date.

• Right to a renewed lease:

  As per Section 71, if the Mortgagor obtains a renewal of the lease since the mortgaged property is a leasehold property. 

• Right of the Mortgagee to spend money on mortgage-Property:

  If ever, the Mortgagee happened to spend on the mortgaged property so as to preserve it from destruction or for other reasons given under Section 72 of the Act, he may add such expenses to the principal money at the same rate of interest. In the absence of a fixed rate of interest, it is payable at the rate of 9% per annum.

• Right to proceeds of revenue sale or compensation on acquisition:

  The Mortgagee has the right to claim for the mortgage money, wholly or partly, if the Mortgagor had failed to settle the payment backlogs which may be Revenue arrears, rent due, or other charges attached to the mortgaged property.

Liabilities of Mortgagee:

Section 76 lists the following liabilities of Mortgagee in possession:

1. Duty to maintain the mortgaged property.

2. Duty to collect the profits associated with the property.

3. Duty to pay government dues with the generated income from the property unless there is a contract to the contrary.

4. Duty to take necessary measures with his entire endeavour to keep the property undamaged.

5. Duty to keep records of the revenue and expenditure of the property.

6. Duty to carry out urgent and necessary repairs of the property.

I have enlisted all the details regarding what are rights of mortgagee. If you still have any questions, drop them in the comments below

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